2 Ultra-High-Yield Dividend Stocks to Skip, and 1 You Should Buy for Income

High-yield dividend stocks are alluring if you like to collect dividend income. In theory, the higher a stock's dividend yield, the more income you can generate from every dollar you invest. The reality is that higher-yielding dividend stocks often have higher risk profiles.

When it comes to high yields, Ford (NYSE: F), UPS (NYSE: UPS), and Enbridge (NYSE: ENB) certainly look enticing. Their payouts range from nearly 6% for Ford and Enbridge to almost 7% for UPS. That's significantly higher than the S&P 500's sub-1.5% dividend yield.

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However, only Enbridge offers a very bankable income stream. That's why you should buy the energy stock to earn income while skipping the high-yield payouts of Ford and UPS.

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An ultra-low-risk, high-yielding dividend stock

Enbridge operates a diversified energy infrastructure platform built around stable utility and pipeline operations. Its four core franchises -- liquids pipelines, gas transmission and midstream, gas distribution and storage, and renewable power -- produce very stable cash flow, with 98% coming from cost-of-service or contracted frameworks. The company's low-risk business model produces extremely predictable results. Enbridge has achieved its annual financial guidance for 19 years in a row. That's impressive, considering it experienced two significant recessions --- the financial crisis and the pandemic -- and several other periods of energy market volatility.

The company pays out 60% to 70% of its stable cash flow in dividends each year. It also has a strong investment-grade balance sheet. That provides it with billions of dollars of annual capacity to invest in organic expansions and bolt-on acquisitions. Enbridge has a multibillion-dollar backlog of commercially secured expansion projects that should come online through the decade's end. The company estimates that it has the fuel to grow its cash flow per share at a 3% to 5% annual rate in the future. That should enable it to increase its dividend by around a similar annual rate, further extending its growth streak, which hit 30 straight years in 2025.

Ford's dividend is running low on fuel

Ford has a spotty track record of paying dividends. The iconic automaker has had to suspend its dividend twice over the past couple of decades because of adverse market conditions.

The company currently aims to return 40% to 50% of its adjusted free cash flow to investors in dividends. That policy has led Ford to pay an additional supplemental dividend each of the past three years. However, the company initially expected its cash flow to decline from $6.7 billion last year to around $3.5 billion to $4.5 billion this year. It paid $3.1 billion in dividends last year, which included its supplemental payout, so while that would have been enough to cover its current dividend outlay, the company's outlook has dimmed considerably because of the uncertain impact of tariffs on the auto sector. That caused Ford to suspend its guidance for the year.

Analysts believe this situation could cause Ford to cut its dividend. The consensus is that it will trim the payout to $0.12 per share as early as the next quarter, with some seeing an even deeper cut forthcoming. Income-focused investors should therefore skip over Ford when looking for a high-yield dividend stock to buy.

UPS might not be able to deliver reliable income

UPS has been a very reliable dividend stock over the past quarter century. The global logistics company has either maintained or increased its dividend every year since going public in 1999. In the press release announcing its latest dividend payment earlier this month, the company stated that "commitment to the dividend is one of UPS's core principles and a hallmark of the company's financial strength."

However, there are growing concerns about whether UPS might need to cut its payout. Its free cash flow has declined from $2.3 billion in last year's first quarter to $1.5 billion this year because of the impact of tariffs on global shipping volumes. That's just enough to cover its nearly $1.4 billion dividend outlay. Meanwhile, the company recently lost some of its business with Amazon to rival FedEx. While UPS has said that this is a lower-margin business that's not very profitable, its stock has been dropping in recent months because of concerns it would lose this business, which would put additional pressure on its margins and earnings growth. Given all its issues, UPS seems a bit too risky as an income stock right now.

Buy Enbridge over Ford and UPS for income

Buying high-yielding dividend stocks can be a great way to generate some extra income. However, investors need to put in some additional work to ensure the stock they buy can sustain its high-yielding payout. Enbridge should have plenty of fuel to continue paying a steadily rising dividend. What's unclear is what the future holds for the high-yielding payouts of Ford and UPS, so investors should skip their dividends and buy Enbridge for its more sustainable income stream.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Matt DiLallo has positions in Amazon, Enbridge, FedEx, and Ford Motor Company. The Motley Fool has positions in and recommends Amazon, Enbridge, and FedEx. The Motley Fool recommends United Parcel Service. The Motley Fool has a disclosure policy.